Business use percentage of the vehicle

The business-use percentage broadly is the business kilometres for the year divided by the total kilometres travelled (obtained from odometer records).

All relevant matters should be taken into account though, including log book, odometer and any other records kept, and a variation in the pattern of business use throughout the year due to things like holidays or seasonal factors

As a general rule, the higher the business-use percentage:

under FBT — the lesser the amount of FBT payable

under income tax — the greater the deductions that may be claimed for work-related car expenses

What are the requirements for a valid log book?

The requirements for maintaining a log book for income tax and FBT purposes are mostly the same, although there are some small differences.

The main difference is that an FBT log book applies to the relevant FBT year (that is, ending March 31) while an income tax log book applies to an income year (that is, ending June 30).

Things to be mindful of when using a log book include:

The log book is valid for five years

After the fifth year, a new log book will need to be kept. A new one can be started at any time (for example, if it no longer reflects the business use).

The log book must be kept for at least a continuous 12 week period

That period needs to be representative of your usual travel throughout the year.

For two or more cars:

If you use the log book method for income tax for multiple cars, the log book for each car must cover the same period.

For FBT, one log book must be maintained for each car where multiple cars are provided by an employer.

The log book must reflect the business use of the vehicle

This can be tricky where there is home to work travel, travel between workplaces, or if your work is itinerant in nature. This log book template will help.

You must keep odometer records

This is crucial for working out the total distance travelled during the year, and also for the relevant period that the log book is kept. Generally, most odometer records will be kept as part of the log book, showing the starting and closing odometer records for the period.

What information must be kept in your log book?

Each log book must contain:

When the log book period begins and ends

The car’s odometer readings at the start and end of the log book period

The odometer readings at the start and end of each income year that you use the log book method for

The total number of kilometres the car travelled during the period

Details for each journey (if two or more journeys are made in a row on the same day, this can be recorded as a single journey) showing:

Date journey started and finished

Odometer readings at the start and end of the journey

Kilometres travelled

Reason for the journey. Note, in the Tax Office’s view, an entry stating “business” or “miscellaneous business” will not be enough. The entry should sufficiently describe the purpose of the journey. Private travel is not required to be shown, but it may help to include in the records to help with calculations.

Get a log book

You can buy pre-printed vehicle log books from stationery suppliers, create your own, or use this template we have created for you.

Although the tool is appropriate for people wishing to claim work-related car expenses, the ATO has not indicated whether it is appropriate for FBT purposes. There are other third party apps that may satisfy the requirements under FBT law but you should satisfy yourself that any app you choose fulfils the requirements under the tax law (check with us if you’re not sure).

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About Us

Synectic is a Chartered Accounting and Advisory firm that brings together the skills of accountants, business advisers, financial planners, self-managed superannuation experts, and auditors. Our team operates state-wide from Devonport, Hobart and Launceston offices.

Our mission is to help people, businesses and the community prosper.

We offer the depth of knowledge, specialist skills and progressive resources usually associated with much larger firms. Yet our size and availability allows us flexibility and enables us to develop an in-depth understanding of your business and financial affairs.